Nonfarm payrolls ahead, TSMC sales top estimates – what’s moving markets

Investing.com – US stock futures edge broadly lower ahead of the release of the all-important December nonfarm payrolls report on Friday. The data could have an impact on Federal Reserve interest rate expectations, with many officials at the central bank already signaling some caution around future possible cuts. Elsewhere, Taiwan Semiconductor Manufacturing Co. (TW:2330) reportedly posts fourth-quarter revenue that tops market estimates.

1. Futures widely lower

US stock futures mostly pointed down on Friday, as investors prepared for the publication of a key employment data later in the session.

By 03:28 ET (08:28 GMT), the S&P 500 futures contract had dipped by 10 points or 0.2%, Nasdaq 100 futures had shed 66 points or 0.3%, and Dow futures were mostly unchanged. Wall Street was closed on Thursday in observance of the funeral of former US President Jimmy Carter.

Highlighting the agenda at the end of the trading week is the nonfarm payrolls report, which is tipped to indicate that the US economy added fewer jobs in December than the preceding month (more below).

A stronger-than-anticipated figure could place more upward pressure on benchmark US 10-year Treasury yields, which have recently touched multi-month highs. As a result, a recently bolstered US dollar may see even more lift and stocks could come under pressure as traders assess a growing term premium and elevated discount rates.

Still, in a note to clients, analysts at ING argued that while payrolls are “pivotal”, the numbers would “need to deviate materially from consensus to have an effect this time around.”

2. Nonfarm payrolls ahead

Economists forecast that the upcoming payrolls report will show that there was a rise of 164,000 roles in December while the unemployment rate is projected to match November’s pace of 4.2%.

Average hourly earnings growth is also expected to cool slightly to 0.3% from the prior reading of 0.4%.

The report will likely face close scrutiny from Federal Reserve policymakers, who have signaled some caution over the potential of future interest rate cuts due in part to recent signs of US economic resilience. Minutes from the Fed’s latest gathering suggested that some members are now more focused on the possible impact of President-elect Donald Trump’s trade policies on inflation.

Overnight, statements from several Fed officials indicated that staff are widely in agreement that there is no rush to roll out further drawdowns in borrowing costs. Markets are now anticipating less than two reductions this year, with the first not fully priced in until June, when there could be more clarity around Trump’s plans to introduce sweeping new tariffs on allies and adversaries alike.

3. TSMC sales top estimates – report

TSMC reportedly clocked better-than-expected sales for the fourth quarter, as the world’s biggest contract chipmaker was boosted by robust demand from the fast-growing artificial intelligence industry.

Sales in the October-to-December period came in at T$868.42 billion ($26.36 billion), above analysts’ estimates, Reuters reported, citing its own calculations and LSEG data.

In December alone, the figure jumped 57.8% to T$278.16 billion ($8.44 billion), TSMC said in a statement on Friday.

The return may contribute to a positive tone for chip demand heading into 2025, with TSMC in particular continuing to benefit from heightened capital expenditures on data centers and other AI-related infrastructure. This trend has largely offset weakness in chip demand for consumer electronics, which TSMC warned is unlikely to improve in the near term.

TSMC manufactures chips for several major technology companies, including AI-darling Nvidia (NASDAQ:NVDA) and iPhone-maker Apple (NASDAQ:AAPL).

4. Tesla launches revamped Model Y in China

Tesla (NASDAQ:TSLA) has unveiled an updated version of its Model Y offering in China, as the electric vehicle giant pushes to address fierce competition from domestic rivals in the country.

Priced from 263,500 yuan, the updated Model Y is about 5.4% more expensive than a previous version of the car, Tesla said in a post on social media platform Weibo (NASDAQ:WB).

The latest model features a new light bar as well as seats that can be either heated or ventilated depending on weather conditions and a touchscreen for passengers in the second row of the car.

Deliveries in China, the world’s largest automotive market and Tesla’s second-biggest region, are due to begin in March, pending approval from regulators.

Sales of the Model Y, the world’s best-selling car, have flagged somewhat as Tesla grapples with competitors in China and sluggish EV demand in other markets.

5. Crude on track for weekly gains

Oil prices rose Friday, on track for a third straight week of gains, with demand receiving a boost from severe winter conditions in parts of the United States and Europe.

By 03:30 ET, the US crude futures (WTI) climbed 1.0% to $74.71 a barrel, while the Brent contract rose 1.0% to $77.68 per barrel.

Over the three weeks ending Jan. 10, Brent has advanced 6% while WTI has jumped 7%.

Many parts of central and eastern United States are expected to experience below-average temperatures over the next few days, while many regions in Europe have also been hit by extreme cold, which is likely to increase demand for heating.

(Reuters contributed reporting.)